Afghan economy grew despite uncertainty: WB

KABUL Bank said on Wednesday.

“Growth picked up in Afghanistan in 2019. This is good news, but insecurity and political uncertainty are holding back the Afghan economy,” said World Bank Country Director Henry Kerali.

Afghanistan needed to ramp up the pace of reforms to generate faster growth necessary to improve the living standards of the people and reduce poverty, he stressed.

The report said as drought impacts further receded and private sector confidence improved following the presidential election, growth was expected to accelerate to 3.3 percent in 2020.

Over the medium term, it said, growth was projected to hover around 4 percent provided that the security situation did not further deteriorate and that international aid support continued.

Growth prospects are subject to other significant downside risks, including further political instability, unexpected cuts in foreign aid and adverse regional developments.

The report notes that as drought impacts further recede and private sector confidence improves following conclusion of the presidential election, growth is expected to accelerate to 3.3 percent in 2020.

Over the medium term, growth is projected to hover around 4 percent provided that the security situation does not further deteriorate and that international aid support continues.

Growth prospects are subject to other significant downside risks, including further political instability, unexpected cuts in foreign aid, and adverse regional developments.

Domestic revenue collection reached a new high of 14.5 percent of GDP in 2019, up from 13.3 percent in 2018. Strong revenue performance reflected both progress in establishing a robust tax system and substantial one-off revenues, including transfers from Da Afghanistan Bank.

The potential for much faster growth exists but remains dependent on continued support from the international community and the Afghan government’s commitment to pushing business environment and anti-corruption reforms, the report says.

“The international community needs to maintain its support to Afghanistan over the medium term to sustain the country’s recent development progress and help realise its long-term growth and self-reliance prospects,” Kerali suggested.

By the same token, the Afghan government was asked to assure its international partners that progress was being made on governance and that aid resources were used efficiently.

To boost confidence in the short-term, the World Bank underlined the need for the government to accelerate improvements in business environment and anti-corruption reforms.

pr/sa/mud